Four crucial factors to consider when buying a company car

Purchasing cars for use by employees poses numerous risks and potential barriers for businesses. It can appear to be a minefield due to the number of offerings, variants and fuel types across several different market segments.

It is a choice that should be carefully considered to ensure staff are driving the right car for work purposes. But prior to making a decision as to the optimum make and model, there are several factors that need to be taken into account:

How much is the vehicle going to cost to buy and run? There is little business sense in opting for a car that is going to have a negative impact on the finances of the employee and employer through excessive fuel consumption and ownership costs. Recent changes in legislation mean that cars emitting less than 75g/km CO2 qualify for a first year writing down allowance (WDA), allowing the purchase to be fully offset against corporation tax. Many businesses are also choosing plug-in hybrids over traditional petrol and diesel vehicles thanks to greater fuel economy and far lower emissions. This is not forgetting the added incentive of the UK government's Plug-In Car Grant (PICG) totalling £5,000, which comes off the price of cars that can run for up to 31 miles solely on electric power.

Similarly, for those on PAYE, and for when a car is used for both business and leisure, there is the added consideration of the Benefit In Kind (BIK) banding. This determines the taxation liability on an employee's monthly take home pay, which varies for lower and higher rate income tax earners.

Do your homework. Assess what the car will be used for, who will be driving it, where, and also the distances that will be looking to cover. This will have a major influence on the type of vehicle (i.e. saloon or SUV) and its interior specification. Comfort, space and ergonomics are prime factors as they help to reduce the impact on driver health and stress. Do the seats provide sufficient support? Is there adequate head and legroom? Are there driver aids such as parking and cruise control? Is there enough room to store equipment needed for work? These are just some criteria to address from what is a sizeable list.

Safety comes first. With the great strides that have been made in automotive technology, many safety systems are now standard, but there are also plenty of abbreviations which come with the territory: ESP, ABS and AEB, to name just a few. It is important to know what accident reduction equipment the vehicle is fitted with – particularly in view of research that has shown that one in three company car users will have an accident during the next 12 months. This has the potential to place a huge burden on the bottom line in terms of expensive and lengthy insurance claims, accident repairs and employee absence or rehabilitation.

Moving on to the interior, does the in-built communications systems allow the driver to stay in touch safely with others on the move? Consider, for example, voice-actuated controls that allow the driver to activate functions such as the satellite navigation without the need to remove their hands from the wheel.

Is the driver legal and fit for purpose? Even before the driver takes to the road, it is the important responsibility of the employer to assess that correct procedures are in place to ensure that they are legal and in good health. Driving licences that are valid one year can expire the next, and so can penalties. Set up an online portal to keep a tab on the status of all licences in order for any variations to be immediately flagged. Eyesight is an essential consideration in risk assessment as this changes over time, and individuals need to have the ability to view objects at a distance and read live data from inside the car.

Driver error is a major factor in more than 90 per cent of road accidents, which means employees have a large part to play in duty of care, being responsible, and knowing their limits. Therefore, training programmes, such as those offered by Fleet 21, a partner of Volvo and Co-Pilot, are a good opportunity for increased hazard perception and awareness prior to staff taking to the wheel.

Selwyn Cooper is head of business sales at Volvo Cars UK

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